Central Garden & Pet (CENT) shares plunged 5.73% in Thursday's trading session, despite the company reporting better-than-expected third-quarter earnings. The sharp decline comes as investors seem to be focusing on the company's revenue miss and ongoing sales pressure in both its Pet and Garden segments.

The company reported non-GAAP earnings per share of $1.56 for its fiscal third quarter, exceeding analyst estimates by 9.1%. This represented an 18.2% increase from the same period last year. However, GAAP revenue fell short of expectations, coming in at $961 million, 3.1% below analyst forecasts and down 3.5% year-over-year.

While Central Garden & Pet demonstrated strong profit growth and margin improvement, with gross margin expanding by 280 basis points to 34.6%, both major segments reported declining GAAP net sales. The Pet segment saw a 3% drop in sales, attributed to "assortment rationalization" and softer demand in durable pet products. The Garden segment posted a 4% decrease in GAAP revenue, citing the loss of two product lines and unfavorable weather conditions. Despite these challenges, management reaffirmed its full-year FY2025 non-GAAP EPS guidance, maintaining capital spending plans and reporting higher share repurchase activity.